SECTION 1. Tennessee Code Annotated, Section 67-6-313, is amended by adding the following new subsection:

( ) There is exempt from sales and use tax, computer media exchange services where the resulting media is shipped out of Tennessee or to a government agency or non-taxable entity located within Tennessee. "Media exchange services" means the process of transferring stored data from one type of storage medium to another type of storage medium, including, but not limited to, magnetic tapes, magnetic cartridges, CD ROM, magnetic disks/diskettes, laser disks/diskettes, optical disks/diskettes, or any similar media that is used to store or transfer data from one computer to another.

SECTION 3. This act shall take effect July 1, 1997, the public welfare requiring it.